In the closing months of 2018, Ministry of Corporate Affairs circulated some proposals for amending the Companies Act 2013 for public comment. Some of these proposals if implemented as circulated, will have important implications for Independent Directors on Company Boards. Already caught between the proverbial "Devil and the Deep Sea" of powerful promoters and executives on the one hand and on the other, increasingly demanding governance requirements of the State and its Regulators, these changes will most likely render the job of conscientious Independent Directors even more onerous and challenging that at present.
In brief,
At the request of the National Stock Exchange Centre for Excellence in Corporate Governance (of which I am a member), I contributed a Quarterly Briefing datelined April 2019. Full text can be accessed here
In brief,
- Disgorgement of inappropriate earnings mandated; applicability to Independent Directors unclear but not unlikely
- Permitted non-directorial pecuniary receipts being increased and linked to individual director’s personal income; besides any potential impairment to independence, this may lead to discord among directors if remuneration differences between them on the same board are significant
- Onerous oversight of compliance responsibility in respect of undisclosed significant beneficial ownership issues; onus of identifying significant beneficial ownership shifted to the company in addition to the present siting of responsibility on the shareholders on record and the significant beneficial,owners
- Mid-Term resignations of Independent Directors to take take effect with a lag of one month; notice of resignation with detailed reasons to be filed with the Registrar of Companies within a week
- In cases of oppression and mismanagement, possible risk of Independent Directors losing "fit and proper" status to serve on boards for a period of five years, if collusion proved
- Academic certification required to qualify as ID except where exempted
At the request of the National Stock Exchange Centre for Excellence in Corporate Governance (of which I am a member), I contributed a Quarterly Briefing datelined April 2019. Full text can be accessed here
